Buy-to-let interest rates fall as rents continue to rise

Tenant demand pushes up prices with the best yields in the north

BUY-TO-LET investors are enjoying their best rental income in eight months and
benefiting from a fall in borrowing costs.

Last week, NatWest, part of Royal Bank of Scotland, 82%-owned by the taxpayer,
launched two best-buy deals for landlords. A number of building societies —
including Skipton, Accord, Leeds and Birmingham Midshires — have also cut
rates this month.

The table-topping NatWest deal is 3.49% fixed for two years. It also has a
two-year tracker at 2.99 points over Bank rate for two years, so 3.49%. Both
deals have a £1,999 arrangement fee. That beats the previous best buy:
Woolwich’s 3.88%, shaving £780 a year off an interest-only mortgage of
£200,000. Cheltenham & Gloucester and Northern Rock reduced rates
by up to 0.2 percentage points on some deals. Principality cut rates by up
to 0.6 percentage points.

All this has come as rents rise for the third month in a row, hitting an